Superannuation is bigger than just returns

The assessment of performance of superannuation funds has gained traction over the past month, with the release of the government’s first superannuation performance test findings. When deciding to switch funds, it is easy to be swayed by investment returns, but there are other considerations that are as important. SuperRatings CEO Kirby Rappell says ‘Superannuation is bigger than just returns. It’s a good idea to consider a variety of factors such as fees, investment choices and insurance when deciding whether a fund is right for you.’

SuperRatings suggests you consider fees and returns in tandem as focussing solely on fees may mean that you miss out on higher account balances if a fund invests in more costly assets to generate greater returns. You should also look at total fees, which include both administration and investment fees to make sure you are comparing like with like.

Another key thing to consider when comparing super funds is investment choice. Mr Rappell says ‘make sure the funds you’re considering have investment options that suit you. This can range from ensuring the fund has an investment option that suits the level of risk you’re comfortable with to checking if there are specialist investment options such as a socially responsible option.’

One of benefits of super for many is the insurance available via a fund. As with any insurance product, it is important to work out what you want covered, the level of cover you need and if that cover is available in your comparison funds. Fees and returns, investment choice and insurance coverage all should be considered when deciding to move super fund. We suggest using the tools and calculators offered by funds to see what meets your needs and the impact switching funds could have – particularly on your insurance cover.

Looking at returns, SuperRatings has seen balances continue to grow in August. The typical balanced option returned an estimated 1.6% over the month and 18.2% over the year.  The typical growth option returned an estimated 1.9% for the month and the median capital stable option also increased 0.7% in the month.


Accumulation returns to August 2021

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SR50 Balanced (60-76) Index 1.6% 18.2% 8.0% 8.6% 8.1% 9.0%
SR50 Capital Stable (20-40) Index 0.7% 7.8% 4.6% 4.6% 4.8% 5.5%
SR50 Growth (77-90) Index 1.9% 22.1% 9.3% 9.9% 9.1% 10.1%

Source: SuperRatings estimates


Pension returns were also positive in August. The median balanced pension option returned an estimated 1.7% over the month and 19.7% over the year. The median pension growth option returned an estimated 2.0% and the median capital stable option also increased an estimated 0.7% in the month.


Pension returns to August 2021

  Monthly 1 yr 3 yrs (p.a.) 5 yrs (p.a.) 7 yrs (p.a.) 10 yrs (p.a.)
SRP50 Balanced (60-76) Index 1.7% 19.7% 8.6% 9.3% 8.7% 9.9%
SRP50 Capital Stable (20-40) Index 0.7% 8.5% 5.1% 5.3% 5.2% 6.1%
SRP50 Growth (77-90) Index 2.0% 23.9% 10.0% 10.8% 9.9% 11.3%

Source: SuperRatings estimates


Source: Lonsec, by Kirby Rappell